Incorporating climatic variability in a partial equilibrium model of ethanol trade: The case OF U.S. and Brazil

Rachna Tewari, Jaime Malaga, Jeff Johnson

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

This study analyzes the impact of climatic variability on ethanol trade between Brazil and the U.S, over a study period of 30 years, from 1980-2009. An econometric model was set up to estimate a net export supply function for Brazil, and a net import demand function for the U.S, as impacted by market and climatic variables. The climatic variables for the model were derived from prior literature, linking them to the yields of corn and sugarcane, which are feedstock for ethanol production in the U.S and Brazil respectively. The results suggest that climatic factors play an important role in the feedstock production for ethanol in these two countries, thereby influencing the direction of exports and imports. In South East Brazil, both low temperature and increased precipitation during winter show a positive relation with the net export supply. With regard to the net import demand in the U.S, it shows a negative relation with both increased summer precipitation and higher summer temperatures, while the relation with the average annual minimum temperature is positive. The outcome of this study provides an initial framework for conducting international trade policy studies for bio-fuels like ethanol, by incorporating climate change variables.

Original languageEnglish
Title of host publicationEmerging Issues in Global International Agricultural Trade and Development
PublisherNova Science Publishers, Inc.
Pages83-100
Number of pages18
ISBN (Electronic)9781634855860
ISBN (Print)9781634855686
StatePublished - Jan 1 2016

Keywords

  • Brazil
  • Climatic variability
  • Ethanol trade
  • Market variables
  • U.S

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